By not offering an artificial incentive to stay in business (the subsidy), product would not have been over-produced and wasted (perhaps an environmental impact), new and in-demand skills would have been acquired, real demands would have been met, and the price for those demands would have fallen (helping the consumer). Thus, by removing the artificial barrier to real and free trade (perhaps influenced by political pressure), economic well-being is ensured for all parties.
Now, consider labor, itself to be a similar commodity as the milk. Perhaps a certain software company employed 5000 employees to write code for a popular program. However, due to better education, increased drive, and longer work days in another country, the company could instead employ 1000 employees abroad (i.e. through "outsourcing"). Given the right political and legal conditions, the company could either allow fewer foreign employees to do the same work, or allow more employees to do the work at a higher price. Clearly, the market has changed and less labor is now in demand for the same work. Yet the company may be forced to stay with the higher priced labor regardless due to artificial barriers (much like the subsidy above). Prices on the product will be unnaturally high, the consumer will suffer, and resources (in this case the labor) will be wasted and misdirected.
Conclusions
Although free trade as represented in the outsourcing question is by nature emotional, the truth is the artificial barrier to trade in labor is counterproductive in many senses. Not only does it keep prices high for consumers, but it waists resources, and perhaps stifles innovation. Much like a dairy farmer could instead produce an "in demand" crop, thusly benefiting society at large (of course, unintentionally), the misdirected labor in the United States (which could be more efficiently provided elsewhere to the eventual benefit of all), could be redirected to new industries and applications as yet unimagined. Just as this is more in keeping with the self-image of the United States as a "world leader" in many areas, it is also in keeping with the economic theories of the earliest thinkers economics. As Adam Smith wrote in...
The third sets of factors that are driving international trade growth are the cultural ones that are the most criticized and discussed in the context of globalization. These factors include the rapid spread of westernized cultural values and purchasing habits vs. those that are native to a given region of the world. For example, the rapid rise in western culture within India and Muslim-led countries are a case in point.
The different generational expectations among workers means that employers will have to tailor their compensation packages much more individually than in the past. Implemented properly, the situation might present some opportunities both to employees and to employers. One way would be to let employees to choose what benefits they want. If their priority is health-care, then they might choose a benefits package that gives more coverage, if their priority is
Motivating Staff in a Global Economy More and more organizational analysts are referring to the modern workforce as increasingly integrated and interconnected. This has occurred in part because of globalization. More and more organizations are branching out, running in multiple countries and providing services to global customers. As the workforce changes and becomes more dynamic, people are increasingly reliant and interdependent within the scope of the workplace. Global integration is a trend
Outsourcing is generally conducted for the benefit of the individual firm, but often creates negative outcomes for the economy at large. The best way to understand the economic issues surrounding outsourcing is to understand the economic tradeoffs at play. Two case studies will help in fostering this understanding. Fishman discusses the experiences of Wal-Mart suppliers, struggling to compete in a global marketplace. Friedman discusses some of the non-economic factors involved
Outsourcing in a Global Community "Even though 'Outsourcing' has its demerits and has been criticized the benefits which it brings is advantageous to the U.S. both now and in the long run." This statement identifies a claim of fact showing that even though outsourcing has its demerits as any other condition would entail, the benefits which the U.S. economy would achieve by way of outsourcing is much more than its disadvantages and
Ltd., 2007). Furthermore, by 2008, real GDP is expected to be $124.2 billion higher than it would be in an environment without it software and services offshore outsourcing (Flatworld Solutions Pvt. Ltd., 2007). Finally, over the last 10 years, the economy has created an average of 3.5 million new jobs a year, and the vast majority of displaced workers are re-employed within six months. According to Flatworld Solutions Pvt. Ltd.
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